Team Ideation Hr Mgmt I Mba544 Offshoring With Audio
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Transcript of Team Ideation Hr Mgmt I Mba544 Offshoring With Audio
OffshoringOffshoring
Nike and the Footwear and Apparel Labor Market
iMBA 544 – HR ManagementTeam Ideation
OffshoringOffshoring
Production relocation across national boundaries to take advantage of cost savings and other benefits in countries where products or services can be produced more efficiently. (Cheung, Rossiter, Zheng, 2008)
Pros & ConsPros & Cons
Pros Reduced Labor Costs Improved Proximity to Materials Superior Cultural Work Ethic
Cons Cultural Differences Cost of Monitoring a Global Supply Chain
Key Outcome VariablesKey Outcome Variables
Labor CostRelative Labor SourcesLogistics CostRelative Socio-Political Risk Profiles
Potential Cost SavingsPotential Cost Savings
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Companies that globalize their cost structures to include low-cost countries can realize savings of 20-40% in the landed costs of their products. (Boston Consulting Group, 2004)
Relative Labor CostsRelative Labor Costs
NikeNike
Market Cap of $21.6 BB2008 Revenue $18.6 BB2008 EBIT $2.5 BB
Nike Labor BreakdownNike Labor Breakdown
Labor AvailabilityLabor Availability
Right HR CostsRight HR Costs
Huselid’s HR Scorecard– Benchmark industry labor force split
• Nike is a leader in apparel and footwear manufacturing
• To remain competitive, Nike must not trail the industry norms for labor cost
Potential Savings ErosionPotential Savings Erosion
RecommendationsRecommendations
No Cost advantage to move manufacturing to U.S
Nike can not afford to bring jobs home– Nike 2008 EBIT was $2.5 BB– US labor force = $6BB-$12BB increase– Huselid’s scorecard signals imbalance
RecommendationsRecommendationsStrong alignment with Huselid’s HR
Scorecard
- Policies in line with business strategies
- Assessment tools
- Tailored HR management programs
RecommendationsRecommendations
Stick to offshore labor for production activities
Nike can still employ in the US– New technology can reduce overtime in
offshore factories– Engineers, product development,
technological advances
Questions & AnswersQuestions & Answers
Thank you for your time this evening.
You are invited to present any questions at this time
References